Cost-Methods {antitrust}

Methods for Calculating marginal and Variable Costs

Description

For Auction2ndCap, calcMC calculates (constant) marginal cost for each product. For those classes that do not require prices, returns a length-k vector of NAs when prices are not supplied.

For Bertrand, calcMC computes either pre- or post-merger marginal costs. Marginal costs are assumed to be constant. Post-merger marginal costs are equal to pre-merger marginal costs multiplied by 1+‘mcDelta’, a length-k vector of marginal cost changes. ‘mcDelta’ will typically be between 0 and 1.

For Auction2ndLogit, calcMC computes constant marginal costs impied by the model.

For Cournot, calcMC calculates marginal cost for each product.

calcdMC computes the derivative of either pre- or post-merger marginal costs. The derivative of Marginal costs is assumed to be constant. Post-merger marginal costs are equal to pre-merger marginal costs multiplied by 1+‘mcDelta’, a length-k vector of marginal cost changes. ‘mcDelta’ will typically be between 0 and 1.

calcVC computes either pre- or post-merger variable costs. Variable costs are assumed to be quadratic by default. Post-merger variable costs are equal to pre-merger variable costs multiplied by 1+‘mcDelta’, a length-k vector of marginal cost changes. ‘mcDelta’ will typically be between 0 and 1.

Usage

## S4 method for signature 'Bertrand'
calcMC(object, preMerger = TRUE)

## S4 method for signature 'VertBargBertLogit'
calcMC(object, preMerger = TRUE)

## S4 method for signature 'Auction2ndCap'
calcMC(object, t, preMerger = TRUE, exAnte = TRUE)

## S4 method for signature 'Cournot'
calcMC(object, preMerger = TRUE)

## S4 method for signature 'Auction2ndLogit'
calcMC(object, preMerger = TRUE, exAnte = FALSE)

## S4 method for signature 'Stackelberg'
calcdMC(object, preMerger = TRUE)

## S4 method for signature 'Cournot'
calcVC(object, preMerger = TRUE)

Arguments

object

An instance of the respective class (see description for the classes)

preMerger

If TRUE, the pre-merger ownership structure is used. If FALSE, the post-merger ownership structure is used. Default is TRUE.

t

The capacity profile of each supplier. Default is ‘preMerger’ capacities.

exAnte

If ‘exAnte’ equals TRUE then the ex ante expected result for each firm is produced, while FALSE produces the expected result conditional on each firm winning the auction. Default is FALSE.